What is the primary business of Gold Star Chili, Inc.?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
The consolidated financial statements of Gold Star Chili, Inc. (the Company) include its subsidiary, TCWW, LLC, and its consolidated entity, GSC Properties, LLC, a variable interest entity for which the Company owns no equity.
Gold Star Chili, Inc. is primarily engaged in the production and distribution of chili and related products to franchisees and Company owned chili restaurants. The Company has 9 Company stores and 48 franchise locations as of December 31, 2024. The Company also sells chili products through grocery stores. In addition, revenue is derived from franchisees in the form of initial franchise fees and royalty fees. Credit is extended to franchisees and grocery stores based on established credit policies. The Company's principal markets are Greater Cincinnati, Dayton, Ohio and Lexington, Kentucky. The Company's viability is dependent on the ability to sell additional franchises, success of stores to generate sales and the Company's ability to collect its revenue from franchisees.
TCWW, LLC franchises the right to operate Tom + Chee restaurants across the United States. There is 1 franchise location, and there are 4 Company stores. TCWW, LLC was acquired in September 2017. Revenue is derived from store sales, franchisees in the form of initial franchise fees, royalties and advertising funds.
GSC Properties, LLC rents real estate to the Company, other franchisees and third parties.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, Gold Star Chili, Inc. is primarily involved in the production and distribution of chili and related products. These products are supplied to both franchised and company-owned Gold Star chili restaurants. As of December 31, 2024, Gold Star operated with 9 company-owned stores and 48 franchise locations. In addition to supplying their own restaurants, Gold Star also sells chili products through grocery stores, expanding their distribution channels. The company generates revenue from initial franchise fees and ongoing royalty fees paid by franchisees. Gold Star extends credit to franchisees and grocery stores based on established credit policies. The company's principal markets are Greater Cincinnati, Dayton, Ohio, and Lexington, Kentucky. The company's viability is dependent on the ability to sell additional franchises, success of stores to generate sales and the Company's ability to collect its revenue from franchisees.
This means that a significant portion of Gold Star's business model relies on franchising. The initial franchise fees and royalty fees from franchisees contribute to the company's revenue stream. The success of individual franchise locations directly impacts Gold Star's financial health, as it depends on these locations to generate sales and meet their financial obligations to the company. The company's ability to manage credit extended to franchisees and grocery stores is also crucial for maintaining a stable revenue flow.
For a prospective franchisee, this information highlights the importance of the relationship between Gold Star and its franchisees. The franchisee's success is intertwined with the franchisor's ability to provide quality products, maintain brand reputation, and offer effective support. The concentration of Gold Star's business in specific geographic areas (Greater Cincinnati, Dayton, and Lexington) suggests that market knowledge and regional expertise may be beneficial for franchisees operating in those areas. Prospective franchisees should carefully consider the company's financial stability and its reliance on franchise sales and store performance when evaluating the franchise opportunity.
Furthermore, the FDD mentions that Gold Star Chili, Inc. also owns TCWW, LLC, which franchises Tom + Chee restaurants. This indicates that Gold Star is involved in managing and franchising more than one restaurant brand. GSC Properties, LLC, another entity, is involved in renting real estate to the company, franchisees, and third parties, adding another layer to Gold Star's business operations.